Friday, August 15, 2003
German economy shrinks in second quarter, confirming recession
Associated Press Frankfurt, August 14
Germany's economy shrank by 0.1 per cent in the second quarter compared to the quarter before, the state statistical agency said on Thursday, confirming the country slid into a shallow recession.
The figure for the April-June period follows a 0.2 per cent contraction in the first quarter. Two consecutive quarters of falling output is one common definition of recession. Technically, Germany was already in a recession, since the zero growth figure from the last quarter of 2002 was rounded up from a minuscule 0.03 per cent drop.
Compared to the second quarter a year ago, the economy shrank 0.6 per cent. Germany is mired in a third year of near-zero growth, a source of political embarrassment to Chancellor Gerhard Schroeder because the weak growth hasn't been enough to create new jobs.
With unemployment at more than 10 per cent, Schroeder has proposed limited reforms aimed at shaking up the country's costly welfare-state system of benefits and worker protections, such as reducing the duration of unemployment benefits and making it easier for small firms to fire people.
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